IMPORTANT INFORMATION FOR PRIVATE INVESTORS

Our investments place your capital at risk. We do not provide investment, tax or legal advice and we recommend you seek professional advice if you are considering investing with us. You may lose part or all of the amount you invest with us. We invest in unquoted shares in small companies. The value of these shares can be volatile, and the shares are often difficult to sell. The tax reliefs associated with our investments depend on the individual circumstances of each investor and may be subject to change. Past performance is not a reliable indicator of future results. Our forecasts and performance targets cannot accurately predict how investments will perform.

Don’t rely on big house-builders to solve the housing crisis

If you thought that the UK’s major house building firms were the answer to the chronic UK housing shortage, think again. Recent statistics show that Britain’s leading developers are still building fewer homes than they were before the financial crisis (Daily Mail, September 2018).

Analysts at AJ Bell puts the figures for the big three at:

Persimmon: 16,043 homes last year and another 8,072 in the first six months of 2018, putting it on course to build 16,685 homes this year, below the 16,701 it built in 2006.

Barratt: 17,579 homes built in the year to July, but still below the 18,588 homes built in 2008.

Taylor Wimpey: 14,541 last year, down on the 14,862 homes it built in 2006.

Since the financial crisis, the UK population has jumped from 60.6 million in 2006 (ONS) to 66.6 million today, an increase of almost 10%. We now need to build at least 300,000 new homes per year to catch up. And it looks like the big fish in the UK building industry aren’t pulling their weight.

No wonder one of the most prominently touted solutions to dramatically increasing supply is to reduce the dependence on a small number of industry giants: “Rebuilding plurality in the industry would help bring about dramatic increases in housing output.” (Reversing the decline of small housebuilders 2017: HBF).

This is no easy task. With the financial crash, a downward trend in smaller UK house-builders was disastrously exacerbated. According to Stewart Baseley, Chairman of the Home Builders Federation, “we have lost thousands of SMEs during the last 30 years”. In the period 2007-2009 alone, one-third of small companies ceased building homes.

Research by the Home Builders Federation suggests that, if small builders were given greater support, they could make a big difference to the numbers. Returning to the number of home builders operational in 2007 could help boost housing supply by 25,000 homes per year. And even a return to 2010 levels could help increase output by 11,000 homes per year.

Bearing in mind that the Q4 2017 RICS Construction and Infrastructure Market Survey found that only 12% of surveyors believed the UK will hit its 300,000 homes per year target in 2018, it certainly seems like it’s time to give better backing to smaller house-builders. And there are some interesting win-win routes to do that.

One of the major issues has been financing. Lenders’ experiences through the global financial crash have resulted in a drastic change in borrowing available to small builders for funding construction costs. But the current demand and the security builders can provide make this an attractive market for alternative lenders. And this is where you could benefit.

Participating in the new-build residential housing market doesn’t have to involve massive investment. Helping to drive the UK economy, while benefiting from the attractive potential returns could be within your reach, along with the potential for 100% IHT mitigation through Business Relief qualification.

One way to access these returns and the potential IHT relief is through Oxford Capital’s Estate Planning Service*. The Service aims for real returns by investing on your behalf in (among other things) loans to smaller, established UK house-builders to finance approved housing projects. It is available in subscriptions of £25,000.

Click here for more information on how you can back small, UK house-builders through the Oxford Capital Estate Planning Service.

* The Oxford Capital Estate Planning Service invests in unquoted companies. Capital is at risk. Tax advantages are summarised based on current legislation. Tax treatment depends on the individual circumstances of each client and may be subject to change in future.

OXFORD OFFICE

The investments referred to on this website will place your capital at risk. Oxford Capital Partners LLP’s products and funds invest in unlisted companies which are likely to be harder to value and sell than quoted shares. Please note that tax reliefs are dependent on investors’ individual circumstance and are subject to change. Where reference is made to past or future performance this should not be taken as a reliable indicator of future results. Oxford Capital Partners LLP does not provide advice and the information on this website should not be construed as such. Investors should seek advice from a regulated adviser.

At Oxford Capital we have quickly adjusted to the ‘new normal’ of working within the restrictions of Covid-19. All of our team are working effectively from home, and our operations are carrying on as normal. The health and wellbeing of our colleagues and their loved ones remains paramount and we are focused not only on maintaining business as usual but on keeping morale high in an environment of much less social interaction. We recently welcomed our first remote new hire and our team has rallied in supporting her induction. We recognise the challenges of juggling home and work life at the moment, and are touched by the positive attitude and adaptability with which everyone has responded. The technology of Teams, Skype and Zoom has become routine for daily interactions both inside and outside the firm, and we are communicating with clients, founders and business partners as usual. We have also enjoyed getting to know better the children, partners and pets of our colleagues and friends, bringing moments of laughter, joy and humanity.

Clients’ investments are being managed as normal by our investment team. We continue to attend portfolio board meetings and other meetings as usual, albeit remotely. Many of the usual business events and conferences that we are used to participating in are being hosted online and we participate and contribute as normally as we can.

It is important during times of such uncertainty to remember that investing in small private companies is a long-term activity. We seek to guide and support our founders and portfolio companies through their respective challenges, drawing on our own experience of past crises and on good teamwork. Following an intense period of working with our portfolio companies to assess the impact of Covid-19, we have supported action where required to take early measures to reduce costs and extend cash runways. Much of our thinking is now turned to the positioning of companies for long term opportunities as the market takes a leap forwards in accelerating digital transformation in many sectors of the economy, often building on trends that pre-existed the crisis. Many of the companies in the portfolio have demonstrated their commitment to social responsibility by supporting the NHS and key workers, governments and supporting their own staff and families. We support these efforts simply as they are the right thing to do.

At Oxford Capital we continue as normal whilst anticipating the next “new normal”. No employees have been furloughed. We are fortunate to work in a business which is willing to help others. We do our best to support each other and our loved ones, just as we endeavour to support our investee companies. We salute Captain Tom for his extraordinary fund raising efforts. We also recognise the efforts of our portfolio companies and so many entrepreneurs as they navigate the Covid-19 challenges. We hope that these efforts will contribute to the success of our nation’s economic revival and to value for our investor-clients.